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This paper delves into the proliferation of non-practicing entities (NPEs), a hot topic in academia and public policy, especially in the United States. The common belief is that Europe is less exposed to NPEs due to a robust patent system, higher enforcement costs, and smaller damage awards. Yet, using a new database of NPE patent applications at the European Patent Office (EPO), the study uncovers that NPEs activity in Europe is arising: they own nearly 20,000 EPO patents, primarily in Electrical Engineering. Moreover, we contribute the literature investigating the heterogeneity of the NPE business model and its relationship with the characteristics and use of the patents they target. Our econometric analysis provides threefold original evidence. First, NPEs with higher propensity for litigation (i.e. "Litigation" NPEs) acquire patents with higher infringement risk but similar technological quality than practicing entities. Second, patent aggregators (i.e. "Portfolio" NPEs) and technology companies (i.e. "Technology" NPEs) acquire higher-quality patents compared to those acquired by practicing entities. Third, patent acquisitions by "Litigation" NPEs and "Portfolio" NPEs reduce the subsequent use of protected technologies. [ABSTRACT FROM AUTHOR]

I study the effect of patent-infringement claims by patent trolls on acquisitions of small firms. Exploiting staggered adoption of state anti-patent troll laws, I find that the laws have two effects. First, the number of acquisitions of small firms declines after these laws are adopted. Second, the anti-troll laws increase the acquisition price for acquirers. The market reflects the increased cost of acquisition as measured by lower acquisition announcement returns. Large firms increase R&D after the adoption of state laws, replacing external innovation. Using a sample of acquisitions that are plausibly unaffected by the laws, I disentangle alternative explanations. [ABSTRACT FROM AUTHOR]

Research Summary: Non‐practicing entities (NPEs) are firms that accumulate and acquire patents but do not further develop or implement the patented inventions (known as patent trolling). NPEs seek to receive royalties or profits through out‐of‐court settlements in patent infringement cases. We examine how firms targeted by NPEs in NPE‐initiated litigations (i.e., target firms) shift their innovation strategies and trajectories in response to heightened litigation risks. We theorize and show that after the initial lawsuit, target firms draw more upon their in‐house technologies to reduce the legal ground for further lawsuits. Furthermore, nontarget firms in related technology areas shift their innovation activities away from those of target firms under high NPE litigation risks. These effects are more pronounced with higher innovation costs and under more competitive product markets. Managerial Summary: Non‐practicing entities (NPEs) are known as patent trolls that accumulate and acquire patents but do not further develop or implement these patented inventions. These patent trolls aim to obtain royalties or profits through out‐of‐court settlements in patent infringement cases. We investigate how firms targeted by patent trolls in litigations (i.e., target firms) change their innovation strategies and trajectories to deal with increased NPE litigation risks. After the initial lawsuit, we find that these target firms use their in‐house technologies more to reduce the legal ground for future lawsuits. Moreover, nontarget firms in related technology areas move their innovation activities away from those of target firms under high litigation risks. These effects are stronger when innovation costs are higher and under more competitive product markets. View Video S1 [ABSTRACT FROM AUTHOR]

Patent monetisation is an important source of revenues worldwide. This activity is increasingly carried out by patent assertion entities (PAE), which are at the origin of about 40% of infringement actions filed in the United States. This paper uses an original database of US patents reporting PAE patent acquisitions. We document two key empirical facts about the presence of PAEs in the market for patents. First, PAEs build large patent portfolios and contribute significantly to patent transfers in the US. Second, their impact on follow-on innovation is, on average, negative. With a series of dynamic diff-in-diffs analyses, we estimate a significant post-transfer drop in forward citations received by patents acquired by PAEs. This drop is not immediate but takes some years to materialise. Heterogeneity tests show that our results are driven by acquisitions of old and highly cited patents, as well as by patent acquisitions by large patent aggregators. [ABSTRACT FROM AUTHOR]

This Article describes how the original understanding of properly granted patents, from Renaissance Italy to the Patent Act of 1836, generally required tangible proof of the thing to be patented's immediate commercializability and its benefits to society at large, along with ready access to courts or other means to challenge improperly-granted patents (under ordinary standards of proof), as such improperly-granted patents were understood to constitute unjust monopolies that deterred, rather than facilitated, desired innovation. That original understanding is then contrasted throughout to the patent litigation system as it exists in America today in which challengers of improperlygranted patents are effectively denied access to court, while "patent trolls" can come to own vaguely-worded or overly-broad patents that should never have been granted and, without ever producing anything themselves, assert those patents in court under a "presumption of validity" to extort resources from productive enterprises that, unlike the trolls, are making products people want. The situation now--in which the original understanding of the purpose of the patent laws is so diametrically opposed to patent law's operation today--invites reform by supporters of the patent law's original design. [ABSTRACT FROM AUTHOR]

Despite its benefits, the online environment fosters darker consumer behaviours including conflict, revenge, and aggression. Trolling has recently entered the marketing lexicon and poses a substantial threat for consumers and brands. However, current understandings of trolling are limited by a lack of empirical research, and a focus on undiscernible 'trolls' and their behaviours. Accordingly, the term 'trolling' has become a catch-all to describe almost any online misbehaviour. This research takes a broader perspective by examining the historical and discursive conditions that have produced trolling and its social practices. Combining a Foucauldian archaeology with marketing practitioner interviews, this study contributes a comprehensive understanding of trolling as a social phenomenon, the social practices that constitute it, and how trolling is enacted within consumer-brand interactions. [ABSTRACT FROM AUTHOR]

This article discusses the obligations of physicians under the Physicians Act and the Medical Care Act. First, the emergency treatment obligations of physicians are applicable only when they are performing their business, and not when they are not in practice. As for the emergency medical care behavior of the physicians in the nonpracticing state, it should be qualified by applying the provisions of the Emergency Medical Services Act. In addition, the physicians in the performance of business, if the breach of emergency obligations, it has created the risk of the law does not allow, in accordance with the current scholars' insights, will constitutes a negligence crime. [ABSTRACT FROM AUTHOR]

We explain why competing firms form collective entities to buy patents from other entities, particularly from non-practicing entities (NPEs), and follow a catch and release patent strategy. We show why having competitors bid as a single unit is better than having competitors bid against each other. More important, we show that collusive bidding on patents held by NPEs, even when the patents are not essential for a standard (SEPs), may increase consumer surplus, particularly when technological innovation is drastic, and improve social welfare. This provides a theoretical foundation that explains why competition authorities often allow collusive bidding for patents and why courts employ the "rule of reason" to analyze agreements under competition law. We also show that a cartel of incumbents will always outbid a potential entrant, or a patent assertion entity, over a technology that can destroy the value of the incumbents' existing assets. [ABSTRACT FROM AUTHOR]

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The paper investigates the relationship between demand, innovation and research intensity (R&D to output and patents per millions of hours worked) in different groups of industries. These relationships were investigated using disaggregate industry-level data from EU KLEMS, ANBERD and USPTO, in a sample that comprises 12 industries in 18 countries over 1977–2006. The results reported in the paper indicate that demand exerts a positive and significant impact on innovation, measured by R&D expenditure and patents. Moreover, this impact is stronger in high-tech industries than in low-tech ones. The paper also provides evidence that demand does not impact research intensity, despite its impact on innovation. This finding holds both for low-tech and high-tech industries, using both R&D to value added and patents per millions of hours worked as measures of research intensity. This suggests that research intensity is not influenced by demand growth, but most likely depends on the quality of each country's National Innovation System. [ABSTRACT FROM AUTHOR]

Importantly, if that company had dissolved after Henry Ford ended his employment there, all the firm's assets may have been liquidated to pay for its closing expenses.[72] Selden could not sue a company that no longer existed, nor could he sue Henry Ford or Ford Motor Company for a patent reassigned to a bankrupt firm that had dissolved its business ties. By coalescing behind the Selden automobile patent, all vehicles manufactured by Winton's firm had to be marked with signage that stated the date and patent number from the information presented on the Selden automobile patent certificate. In 1895, George Baldwin Selden patented an American automobile that utilized an updated Brayton-style engine. According to the Ford Motor Company and C. A. Duerr's response to the EVC bill of complaint with the US Circuit Court of the Southern District of New York, the original Selden automobile patent changed in many different ways as the sublicensees expanded on the design specifications of their "honest" vehicles.[52] For example, during the Selden case, the Rochester-Selden - the first vehicle based on Selden's patent specifications - was constructed by Henry R. and George B. Selden Jr.[53] Subsequent vehicles were redesigned and manufactured differently from the original Selden prototype. [Extracted from the article]

To what extent and with what effect do owners of standard-essential patents (SEPs) "hold-up" companies that produce standard-compliant products? To explore this question, we construct measures of opportunistic patent licensing behaviors using detailed information collected from the dockets of U.S. patent cases filed (2010–2019) to enforce SEPs and a matched sample of non-SEPs. Overall, we find evidence of at least one opportunistic behavior by the patent enforcer in approximately 77% of SEP and 65% of non-SEP assertions in court. However, these figures mask important heterogeneity across types of conduct. There is significantly more opportunistic conduct that tends to increase a potential licensee's loss if the patent enforcer prevails in court: 35% of SEP assertions versus 10% of non-SEP assertions. In contrast, conduct that tends to increase a potential licensee's litigation costs is less common, and the difference between SEP assertions (8%) and non-SEP assertions (6%) is small. We also show that opportunistic behavior is associated with case settlement, with the direction and strength of the correlation depending on the type of opportunistic behavior. Behavior that increases a potential licensee's litigation costs is associated with an increase in the probability of settlement, while behavior that increases a potential licensee's loss if the patent enforcer prevails in court is negatively associated with settlement. [ABSTRACT FROM AUTHOR]

This study experimentally captures the effects of reforming intellectual property (IP) and measures whether abolishing IP after a vote can reduce the creativity of the most talented innovators. The subjects start in a baseline setting with IP and then move to a second unannounced phase in which IP has or has not been abolished. First, we manipulate exogenously the presence or absence of the possibility to vote for or against IP. Second, we manipulate the information given to the subjects after the first phase. In the information treatment, we inform the subjects right before the vote that a previous experiment that used the same design (Brüggemann et al., 2016) showed that the no IP regime significantly increased players' gains. Contrary to preregistered expectations, the results show that undergoing a vote does not reduce overall creativity. Actually, the most talented innovators do not vote in favor of IP. Rather, the subjects who vote in favor of IP are those who benefit relatively more from royalties. Surprisingly, no correlation is found between these two populations: the IP in our experiment seems to not reward the best players, but the players who choose an 'IP-driven' strategy of focusing on more extensible words while simultaneously relying on their own creations forego cross-fertilization with other players. These are relatively low-skilled players who choose a rent-seeking strategy that maximizes gains from the IP system itself. There are plausible arguments that this result is at least partly valid in the real world, especially for complex and highly sequential innovations where it has been proven that patent trolls and anti-competitive strategies are important. [ABSTRACT FROM AUTHOR]

This Article draws on a newly constructed multilayered relational dataset of patent infringement cases to assess hypotheses about different types of patent asserters and what happens in appeals of those cases. We situate this Article within the ongoing debates around companies that acquire patents but do not themselves practice the claimed technologies, particularly patent assertion entities (PAEs). We find that for some aspects of appeals, such as whether there was an appeal in a patent infringement case, cases brought by PAEs look similar on appeal to cases brought by product companies. But we also observe some substantial differences among litigant types--in particular, whether cases filed by PAEs are appealed more often and who is filing the appeals in those cases. We also observe that, regardless of the patent asserter type, most appeals are filed by patent owners, not accused infringers. Furthermore, even accounting for this difference, accused infringers are more successful on appeal than patent asserters--again, regardless of the type of patent asserter. [ABSTRACT FROM AUTHOR]

We analyze the extent to which private defensive litigation insurance deters patent assertion by non-practicing entities (NPEs). We study the effect that a patent-specific defensive insurance product, offered by a leading litigation insurer, had on the litigation behavior of insured patents' owners, all of which are NPEs. We first model the impact of defensive litigation insurance on the behavior of patent enforcers and accused infringers. We show that the availability of defensive litigation insurance can have an effect on how often patent enforcers will assert their patents. We confirm this result empirically showing that the insurance policy had a large, negative effect on the likelihood that a patent included in the policy was subsequently asserted relative to other patents held by the same NPEs and relative to patents held by other NPEs with portfolios that were entirely excluded from the insurance product. Our findings suggest that market-based mechanisms can deter so-called "patent trolling." (JEL: G22, K41, O34) [ABSTRACT FROM AUTHOR]

We study how innovative firms manage their innovation portfolios after filing for Chapter 11 reorganization using three decades of data. We find that they sell off core (i.e., technologically critical and valuable), rather than peripheral, patents in bankruptcy. The selling pattern is driven almost entirely by firms with greater use of secured debt, and the mechanism is secured creditors exercising their control rights on collateralized patents. Creditor-driven patent sales in bankruptcy have implications for technology diffusion—the sold patents diffuse more slowly under new ownership and are more likely to be purchased by patent trolls. This paper was accepted by Gustavo Manso, finance. [ABSTRACT FROM AUTHOR]

Research summary: Patent assertion entities (PAEs) are intermediaries that acquire patents from inventors and license them to firms that use the intellectual property to develop products. We consider how PAE intermediation influences inventor behavior by reducing the costs to monetize their inventions. Using a proprietary dataset that tracks PAE lawsuits, we find that, as PAE intermediation for a given class of technologies increases, larger numbers of focused inventors (i.e., small firms, universities, and labs) that typically lack commercializing capabilities begin to produce inventions in this class. Further, we find that, compared to their larger counterparts, focused inventors are particularly responsive to increasing PAE intermediation by producing greater numbers of inventions, albeit inventions that likely advance the state of the art only incrementally. Managerial summary: Patent assertion entities (PAEs) serve as brokers of intellectual property by purchasing patents from inventors and licensing these patents to firms that develop products based on them. We investigate how PAE brokerage activities influence inventors. We find that as PAEs become more active in a particular class of patents, inventors who lack commercialization capabilities (e.g., small firms, universities, and research labs) are particularly prone to both begin patenting and increase their rate of producing patented inventions in this patent class. We also find, however, that as PAEs become more active in a given patent class, patented inventions produced by inventors lacking commercialization capabilities are increasingly incremental in nature as compared to patented inventions produced by larger firms that commercialize products. [ABSTRACT FROM AUTHOR]

The article considers whether the U.S. might benefit from a strict pleading standard for direct infringement by comparing its pleading standard to that of the United Kingdom. It mentions discrepancy in the prevalence of patent trolls between the two countries might indicate that a stricter pleading standard like that in the United Kingdom might help the U.S. in its fight against patent trolls.

The article reports that expansion of artificial intelligence (AI) has outpaced regulation requiring a new system for ethical use with copyleft licensing and the patent troll model to enforce ethics and manage intellectual property rights. Topics include uses of AI with problems such as discrimination, inappropriate application, and lack of community engagement; and proposal of Copyleft AI with Trusted Enforcement aims to promote self-reporting and monitoring mechanisms for ethical issues.

Many patent assertion entities (PAEs) hide behind multiple unknown subsidiaries or shell companies with obscure ownership. Meanwhile, the United States Patent and Trademark Office (USPTO), like many other patent offices, does not impose a strict time period for recording the change of ownership of a patent, allowing the holder to gain an advantage by controlling the timing of its ownership disclosure. In this paper, we study to which extent PAEs delay the recording of the U.S. patent reassignments of patents that they will subsequently use in infringement patent lawsuits. On average, PAEs notify the change of ownership more quickly than producing firms, but this is not the case for the patents that they will litigate relatively far in time. In particular, the correlation between the recording lag of the patent transaction and the litigation spell is higher when the patent acquirer is a PAE (than when it is a producing firm) or when the acquirer will litigate the patent in the Eastern District of Texas, famously home to opportunistic litigations. Finally, we find that transactions involving unknown subsidiaries of PAEs are recorded at the USPTO significantly later than those involving PAE parent companies or their known subsidiaries. [ABSTRACT FROM AUTHOR]

The five years since Alice Corp. v. CLS Bank International, 573 U.S. 208 (2014) have witnessed an explosion in patentable subject matter decisions ‐‐ and in political controversy over the doctrine. To its critics, Alice renders important inventions in medical diagnostics, biotechnology, and information technology unpatenable and therefore discouraging investment in critical market sector innovation. To its defenders, Alice offers a reliable, quick, and cheap way to invalidate weak patents owned by patent trolls, reducing patent holdup and protecting innovators. In response to these debates, we explore how the courts actually use Alice. We construct a unique dataset of every district court and federal circuit decision on patentable subject matter from July 2014 through June 2019 and categorize the patent plaintiffs in each case using the Stanford NPE Litigation Database. Once in court, patentable subject matter challenges are far more common in software/IT cases, and biotech/life science innovations are more likely to survive. Surprisingly, the entities most likely to lose their patents are not patent trolls but individual inventors and inventor‐started companies. Our findings have important implications for current legislative and judicial disputes over patent reform as some of the patent owners most impacted may be overlooked. [ABSTRACT FROM AUTHOR]

Using 23 867 standard essential patents claimed for three different wireless telecommunication standards (GSM, WCDMA, and LTE), this research examined the difference in technological importance and breadth of patents between practicing and non‐practicing entities. We discovered that compared to manufacturers and service providers, organizations who do not appropriate innovation‐derived profits directly from product or service markets tended to have relatively low‐quality but broadly scoped technologies for the claimed standard essential patents. These relationships between the characteristics of inventions and the organizational types were consistently held across different generations of wireless standards as indicated by regressions run for each sample split by generation. Furthermore, the theory and policy implications of our results and arguments are presented herein. [ABSTRACT FROM AUTHOR]

As part of that discussion, the existing enforcement regime, including the consumer welfare standard itself, have been questioned by those who suggested focusing entirely on existing notions of consumer welfare may be misplaced, that innovation, worker interest fostering vibrant small business in the face of tech giants, and other societal values ought to be served by our antitrust laws and their enforcers. We had a big, I think, a constructive debate yesterday in the House Judiciary Committee on this issue, and are you looking at user data, are you looking at usage data, are you looking at what kind of data? 8 Then-Assistant Attorney General Jackson argued, "What is needed is the establishment of a consistent national policy of monopoly control, intelligible to those expected to comply with it, and those expected to enforce it." 9 Jackson warned that the only probable alternative to a consistent national policy, favoring competition, is government control of industry. 657 The Federalist Society Presents: THE FUTURE OF ANTITRUST: NEW CHALLENGES TO THE CONSUMER WELFARE PARADIGM AND LEGISLATIVE PROPOSALS + November 14, 2019 National Lawyers Convention The Mayflower Hotel Washington, D.C. Featuring 1: HON. One of the other things that I'm finding is, are people asking the hard question of "Is that data, that the company has, so unique or so uniquely valuable, or is there really an entry barrier, or can you buy that data from other sources, like data brokers, or can you collect it more easily?". [Extracted from the article]

The article offers information on the Great Britain Supreme Court's approach to standard essential patent protection in Unwired Planet v Huawei. Topics include eating a small slice from a very large cake may be more rewarding than consuming all of a much smaller confection, the user of the standard will require to use also the patented elements, and the patent owner will be entitled to a return for use of their technology.

Venture-backed startups play a crucial role in innovation and advancing our technology. However, the development of secondary markets for patents and the proliferation of patent assertion entities starting in the early twenty-first century has made the patent ecosystem a difficult environment for startups to navigate. Startups face challenges that their more established counterparts do not. First, startups must rely heavily on external sources of funding and, as a result, many decide to file for patents early in their lifecycle to signal their value to potential investors. Second, patent assertion entities threaten startups with patent infringement suits at a disproportionately high rate, which disrupts startups' productivity and diverts their limited resources. This Note explores the "vicious patent cycle." The cycle begins when startups file patents to signal worth. Then, when 90% of these startups fail, they leave behind patents that grow the "patent thicket" as well as opportunities for patent assertion entities to stifle innovation. Together, these negative externalities exacerbate the challenge of building a new company. Unfortunately, the United States patent system is not well suited to put an end to the cycle. Thus, this Note introduces a solution for startups: the small business commercialization patent. The small business commercialization patent is a modified form of the commercialization patent introduced by Ted Sichelman but is tailored to meet the unique needs of venture-backed startups. [ABSTRACT FROM AUTHOR]

We provide the first large-sample evidence on the behavior and impact of nonpracticing entities (NPEs) in the intellectual property space. We find that, on average, NPEs appear to behave as opportunistic "patent trolls." NPEs sue cash-rich firms and target cash in business segments unrelated to alleged infringement at essentially the same frequency as they target cash in segments related to alleged infringement. By contrast, cash is neither a key driver of intellectual property lawsuits by practicing entities (e.g., IBM and Intel) nor of any other type of litigation against firms. We find further suggestive evidence of NPE opportunism: targeting of firms that have reduced ability to defend themselves, repeated assertions of lower-quality patents, increased assertion activity nearing patent expiration, and forum shopping. We find, moreover, that NPE litigation has a real negative impact on innovation at targeted firms: firms substantially reduce their innovative activity after settling with NPEs (or losing to them in court). Meanwhile, we neither find any markers of significant NPE pass-through to end innovators, nor of a positive impact of NPEs on innovation in the industries in which they are most prevalent. This paper was accepted by Tyler Shumway, finance. [ABSTRACT FROM AUTHOR]

The patent system features a centralized structure almost from end to end. The United States Patent and Trademark Office (PTO) possesses power to examine inventions, publish patents, and increasingly manage post-examination proceedings. The centralized nature of the patent system leads to well-known inefficiencies, including production problems, low quality patents, and information inefficiencies. Yet, despite intense criticism, and even proposals to 'demonopolize' the agency, the PTO's dominance persists, and has in fact increased with the recent enactment of the America Invents Act (AIA). This Article considers an alternative, decentralized, patent system. Harnessing new developments in database technology, I propose that inventors would submit patent applications to a shared patent record instead of to the PTO. After a grace period, in which inventions would remain secret, the record would open to the public and the patent examination process would ensue. Following the examination, granted patents would be published to the record. During the examination process and throughout the lifetime of the patent, industry and state actors would be able to dynamically update the record. For example, third parties would be able to submit prior art, scientists--to weigh in on obviousness, patentees--to offer licenses, and courts--to list decisions and outstanding cases that pertain to the patent. A decentralized patent model fosters a participatory and dynamic patent record and promises to transform the record into a central tool in the innovation economy. This strategy would yield several key benefits. First, it would boost the quality of patent examination and improve productivity, by allowing knowledgeable parties to shoulder some of the tasks that examiners now perform alone. Second, it would spur innovation by advancing information on new inventions and reduce waste by preventing a race for patents that have already been filed. Third, it would allow inventors to avoid innocently infringing patents that are strategically held by 'patent trolls,' tackling one of the most troubling issues in patent law. Finally, decentralization would facilitate patent licensing, thus driving the adoption of new inventions in the market. Improved licensing forecasts would also produce a dynamic effect: increasing the potential reward of patents ex post, thus boosting the incentive to invent ex ante. [ABSTRACT FROM AUTHOR]

In its May 2017 decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, the Supreme Court reined in the Federal Circuit's permissive venue standard, which had fueled the rise of the Eastern District of Texas as the busiest patent trial court in the nation and the preferred filing location of patent assertion entities (PAEs), derisively known as patent trolls. While the new limits of permissible venue in patent cases continue to be demarcated in the lower courts, sufficient time has passed since TC Heartland to begin to investigate the impact of the decision across a number of dimensions. Accordingly, in this study I examine changes in the volume of cases filed nationally and in leading districts by comparing the numbers one year before versus one year after the decision. Further, I separately study changes in the location, volume, and distribution of PAE and practicing entity litigation. Finally, I examine how plaintiff adherence to the new venue standard in TC Heartland has changed defendant connections to the districts where they are sued. As others have predicted, I find evidence that the largest shift in patent litigation has been from the Eastern District of Texas to the District of Delaware. Specifically, 72 percent more patent cases were filed in the District of Delaware and 68 percent fewer cases were filed in the Eastern District of Texas the year after TC Heartland compared with the year before the decision and the decline in filings in the Eastern District of Texas is entirely attributable to PAEs. Further, changes in filing trends before and after TC Heartland indicate that between 320 and 780 fewer PAE lawsuits were filed the year after than would have been the case had the Supreme Court not restricted venue. Had these cases been filed, they would have comprised between fourteen and thirty-three percent of PAE filings for the year. Closer defendant connections to the courts where cases were filed post-TC Heartland suggest not only that PAEs perceived significant benefits from filing in the Eastern District of Texas and other pro-plaintiff venues, but also that many PAEs believe they are less likely to succeed on defendants' home turf. Comparing the year before with the year after TC Heartland, the share of PAE suits filed in the court containing a defendant's principal place of business jumped from nine to thirty-two percent and the share filed where a defendant is incorporated spiked from ten to forty-eight percent. [ABSTRACT FROM AUTHOR]

Patent assertion entities (PAEs) are playing an increasingly active role in Europe. Their activities are controversial in that although they may be a source of efficiencies, they may also create anticompetitive harm. Given the growing trend of operating companies transferring patents to PAEs to increase their licensing revenues, the risks of anticompetitive harm created by PAE activities must be taken seriously. When analyzing the impact of PAE activities on competition, a distinction must be drawn between "pure" PAEs, which acquire patents from a variety of sources and generate revenues by asserting them, and "hybrid" PAEs, which acquire patents from operating companies and maintain a relationship with these companies postacquisition. Although pure PAEs create risks of exploitation, hybrid PAEs create exclusionary concerns as such PAEs may be used by operating companies to harm their rivals on downstream product markets. These exclusionary concerns are particularly serious when the operating company retains a significant degree of control over the PAE's activities following the transfer of the patents. As there is currently no EU competition case-law on the activities of PAEs, this article attempts to show through hypotheticals that depending on the circumstances of each case, privateering may lead to exclusion. JEL: K21, K41, L24, L40. [ABSTRACT FROM AUTHOR]

Since 2011, several papers and articles have speculated about the motivations, activities, and possible anti‐competitive effects of hybrid patent assertion entities (PAEs) or, more pejoratively, "patent privateers." Most prior work has assumed that privateers are essentially extorting money from firms by making weak infringement claims employing weak patents. Under a more classical law and economics approach, we would expect patent privateers to acquire valuable patents to reduce litigation risk and justify patent enforcement. However, to date, there has been no quantitative analysis on this form of patent holder to support or disprove either of these theoretical viewpoints. This article takes a first step toward filling that gap in the analysis by conducting an empirical assessment of patent lawsuits filed between 2010 and 2013. Although several studies have provided useful analysis on who litigates patents and which patents are more likely to be litigated, we add new variables and insights to the analysis. First, our dataset identifies the business models of the parties involved, including hybrid PAEs. Second, we include data on patent reassignments, which allows us to identify when a hybrid PAE takes (partial) possession of a patent. Third, for making comparisons between litigated and unlitigated patents, our dataset includes a set of unlitigated patents that match our litigated patent dataset on several key variables. In this work, we explore three interesting questions: (1) What patent characteristics predict a patent's acquisition by a hybrid PAE? (2) Do hybrid PAEs acquire patents that are more likely to be litigated? and (3) Does reassignment to a hybrid PAE affect the time when a patent is first asserted in litigation? We find that hybrid PAEs tend to acquire patents in the information technology, surgery, and medical instrument fields more often than patents in other technology areas. Hybrid PAEs also obtain relatively higher‐quality patents than average, but objective quality metrics generally are on par when compared to patents litigated by firms with other business models. Our analysis also suggests that hybrid PAEs prefer patents with a broader scope of protection. Reassigning a patent to a hybrid PAE is generally associated with higher odds that the patents will be litigated. Finally, patents held by hybrid PAEs at some point in their lifespan experience their first litigation later than those never held by a hybrid PAE. In short, our analysis suggests that patent privateers appear to be focused on improving the possibility of successful patent monetization by focusing on acquiring higher‐quality patents with a broader scope of protection, as value and scope are perceived by economists. This research is consistent with the law and economics theory that hybrid PAEs acquire valuable patents and not the extortion theory that they acquire weak patents. [ABSTRACT FROM AUTHOR]

The article focuses on the debate over the role of non-practicing entities (NPEs and prior work on patent enforcement by NPEs in the U.S. Topics discussed include patent enforcement and innovation; prevention of patent infringement; and a survey asking intellectual property licensing lawyers at companies about their experiences with patent enforcement and the effects of patent licensing demands on subsequent innovation.

Healthy organisms inevitably produce cancer cells, and vibrant patent systems inevitably let bad patents slip through. These patents are harnessed by entities that leverage the uncertainty and expense of litigation to extract licenses from technological practitioners. Postissuance patent review (PIPR) has emerged as an invaluable error-correcting mechanism to prevent the socially harmful assertion of improperly issued patents. The United States, with the America Invents Act, established a new system for PIPR, expanding administrative routes to curtail bad patents. Europe is going a step farther with the Unified Patent Court Agreement (UPCA). The UPC A enables a lowcost patent revocation action on a broad range of grounds and with a relaxed standing requirement. But this is an opt-in system with a loser-pays fee-shifting arrangement. Thus, although the structure of the Unified Patent Court (UPC) appears to be set up to facilitate efficient PIPR, the disincentives for opting in suggest that the UPC will be a less effective troll-fighting vehicle than expected. Indeed, patent trolls may simply opt for national patent systems. [ABSTRACT FROM AUTHOR]

The article focuses on the problems of patent licensing negotiations and license deals made by companies and individuals outside of litigation. Topics discussed include patent assertions made by non-practicing entities; divergence between the actual and reported litigation numbers; and an account of data from litigation with respect of the same.

This article develops a model of patent trolls to understand various litigation strategies employed by nonpracticing entities (NPEs). When an NPE faces multiple potential infringers who use related technologies, it can gain a credible threat to litigate even when it has no such credibility vis‐à‐vis any single potential infringer in isolation. This is due to an information externality generated by an early litigation outcome for subsequent litigation. Successful litigation creates an option value against future potential infringers through Bayesian updating. We discuss policy implications including legal fee shifting and the use of injunctive relief. [ABSTRACT FROM AUTHOR]

Most of the available evidence on patent assertion entities (PAEs) is coming from the United States, while little is known for Europe. The up-coming Unitary Patent (UP) and the Unified Patent Court (UPC) system are considered to be game-changing elements for strategic patent options and for patent assertion activity in Europe. Many patent practitioners are watching Europe as the future market place for patenting. PAE activity in Europe is increasing and one reason for this trend is that PAEs originating from the United States are becoming more active in Europe. In the future, fuzzy boundaries of patent claims in general and of software-related claims in particular, new combinations of technologies and enhanced interoperability under the schemes of Industry 4.0 and the Internet of Things could attract PAE activity in technological fields where it has not been seen before. Altogether, some of the features of the new UPC have the potential to play into the hands of PAEs in Europe. The future will much depend on the implementation of the new UPC system, how the different divisions of the court will establish case law decisions and how PAEs will make use of the new system. The intention of the article is to provide an overview of ongoing PAE activity in Europe and to assess the future strategic options of PAEs in Europe based on the design of the new UP and UPC system. [ABSTRACT FROM AUTHOR]